Top 5 Things to Know Before You Pay $10,000 for Medicaid Planning

Let’s start with the uncomfortable question: what exactly are you buying?

Medicaid Planning fees in Indiana routinely run $10,000, $15,000, $20,000 and up. Sometimes a good deal more, once you add in everything that gets billed alongside the “plan.” And most families pay it without ever getting a clear answer to two basic questions:

• What work does that number represent? and
• What happens to my money along the way, meaning do I still have total control?

This isn’t an argument that Medicaid Planning is worthless. It isn’t. Done right, at the right time, it keeps a sick spouse’s care from wiping out the healthy one, and that’s real, valuable work worth paying for… though how much you should pay still needs consideration.

But there’s a version of this business that prices the fear instead of the work — and quietly moves your money in ways that cost you thousands more than the fee itself. Here’s how to tell the difference before you write the check.

KEY THINGS TO KNOW — THE SHORT VERSION

• There is no standard fee for Medicaid Planning. Indiana requires attorney fees to be reasonable and tied to the work performed. It does not set a price, and no one can claim a percentage of what you own.
• Some fees rest on a formula that has nothing to do with the work — like the number of months of nursing home costs the plan supposedly saves you.
• The tax bill is the cost nobody mentions. Emptying an IRA in a single year can trigger a large income tax hit, plus a Medicare premium surcharge two years later.
• “Medicaid compliant” annuities carry commissions the seller collects up front — often thousands of dollars, taken before you fully understand what you bought.
• You may be paying now for access that isn’t there later or never needed. The programs most families actually want are running long waiting lists.

1. IS THERE A STANDARD FEE FOR MEDICAID PLANNING?

No. And this is where it starts.

Indiana doesn’t publish a rate for Medicaid Planning. What the law actually requires is that a lawyer’s fee be reasonable — meaning it reflects the time, difficulty, and skill the work genuinely demanded. That’s the standard. Not a percentage or a formula. Not even what the market will bear when someone’s mother just had a stroke.

So, when a fee comes back at $12,000, the fair question is simple: what work does that represent? A Medicaid application is a real project — gathering five years of financial records, preparing and filing the application, responding to the state’s requests, sometimes setting up a Miller Trust or handling a transfer strategy. That’s genuine effort by people who know what they’re doing, and it deserves to be paid for.

But it’s knowable effort. Any firm doing this regularly knows roughly what it takes. Which means they can quote you a flat fee that covers all of it — the filing, the follow-up, the calls, the state’s inevitable requests for more paperwork. If they can describe the work, they can price the work. Also, understand, a lot of collection of information is done by you.

If the number can’t be explained in terms of work, it wasn’t built from work.

2. WATCH FOR THE “MONTHS SAVED” FORMULA

Here’s the specific practice worth knowing about, because it sounds reasonable until you look at it directly.

The pitch goes something like this: nursing home care around here runs about $10,000 a month. This plan will get your mother qualified for Medicaid roughly a year sooner than she’d otherwise get there. So we’ve saved your family $120,000. Our fee is $18,000 — a fraction of what we saved you.

It sounds like a bargain. It’s also a fee with no relationship whatsoever to the work performed. The same paperwork, the same application, the same phone calls — priced entirely off a hypothetical about how much your family’s care might have cost.

Notice what that formula rewards. Not efficiency. Not skill or care. It rewards having a client with expensive care needs and a lot of assets. Two families can receive functionally identical work and be charged wildly different amounts, based on numbers that exist only in a projection.

And here’s the thing about that projection: it depends on assumptions — about how long care lasts, about when Medicaid would otherwise kick in, about what programs are even available. Change the assumptions and the “savings” change. The fee, oddly, never seems to shrink.

The other unspoken reality:  Many people never end up in a nursing home.

You’re allowed to say: I’d rather pay for the work. What’s that fee?

3. THE IRA TRAP: THE TAX BILL NOBODY MENTIONS

This is the one that costs families the most, and it’s almost never explained up front.

Retirement accounts — traditional IRAs and 401(k)s — are a problem in Medicaid Planning because they’re countable assets holding money that has never been taxed. A common move is to liquidate the account, or convert it into something that counts as income rather than an asset.

Here’s what happens when you empty a $300,000 IRA in a single year: that entire amount lands on that year’s tax return as ordinary income. Not spread out. All at once. It stacks on top of Social Security and any pension, pushes through multiple tax brackets, and can generate a tax bill in the tens of thousands of dollars. Money that was going to be taxed gradually over a decade of modest withdrawals gets taxed all at once, at a much higher rate.

For illustration: a single person with a $300,000 IRA withdrawal and other income of a conservative $50,000, pushes the person into the 35% Federal bracket, plus 3-5% in State and Local taxes. That’s roughly $120,000 paid in taxes, in one year, for money you deferred paying taxes on for decades.

Then comes the part that surprises people two years later.

Medicare premiums are income-based.

If your income exceeds certain thresholds, you pay a surcharge called IRMAA on top of your normal Part B and Part D premiums. And Medicare looks backward two years to set it — your 2026 premium is based on your 2024 income.

The big withdrawal happens, and everything seems fine. Two years later, a letter arrives raising the Medicare premium substantially. For 2026, the surcharge starts once income exceeds roughly $109,000 for a single person or $218,000 for a couple, and it operates as a cliff — one dollar over a threshold triggers the entire tier. At the top end, a Part B premium can run to about $690/monthly instead of the standard $203/monthly.

To be fair and accurate: this generally isn’t permanent. When income drops back to normal the following year, the surcharge falls away — so it’s typically a one-year hit rather than a lifetime penalty, and there’s an appeals process for certain life-changing events. But it’s a real cost, it lands when the family has forgotten why, and it should have been part of the conversation before they emptied the account.

None of this means IRAs can never be repositioned. Sometimes it’s genuinely the right move. It means the tax consequence should be calculated and explained to you before it happens — in actual dollars, on paper. If nobody has shown you that number, ask for it. In fact, your financial advisor may have options that don’t cause nearly, if any, additional taxable episode.

4. “MEDICAID COMPLIANT” ANNUITIES AND THE COMMISSION PAID UP FRONT

Another common move is an annuity sellers market as Medicaid compliant — a product built to convert countable assets into a stream of income that the Medicaid rules treat differently.

These are legitimate tools. In the right situation — particularly crisis planning for a married couple, where the goal is protecting the spouse who’s staying home — they can do real work that nothing else does as well.

But understand how they’re paid for. These are insurance products sold on commission, and because a Medicaid compliant annuity pays out immediately and over a short term, the commission is collected up front, out of your money, at the very beginning. Often, we’re talking thousands of dollars. It doesn’t appear as a line item on the attorney’s bill. It comes out of the principal you hand over.

The honest questions to ask before you sign anything:

• What is the total commission on this product, in dollars?
• Who receives it — and does anyone in this office get compensated for this sale?
• What are my alternatives, and why is this one better for me specifically?
• What happens if the rules change after I’ve bought it?

A professional recommending the right tool for the right reason will answer all four without flinching. Hesitation on any of them tells you something.

5. YOU MAY BE PAYING NOW FOR ACCESS THAT ISN’T THERE LATER

This is the newest problem, and it’s the one that makes the rest of it sting.

The premise of a lot of this planning is straightforward: rearrange assets now so Medicaid picks up the cost of care sooner. But in Indiana today, “Medicaid pays for it” depends enormously on which Medicaid you mean.

Nursing home coverage is an entitlement — qualify, and you’re covered. But the programs that pay for care at home or in assisted living — the settings nearly every family actually wants — are not entitlements. They run on a capped number of slots, and Indiana has been running a waiting list since 2024, with roughly 12,000 seniors on it and estimated waits of one to two years.

COMMON QUESTIONS ABOUT MEDICAID PLANNING FEES IN INDIANA

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